The worldwide Ethernet switch market (Layer 2/3) recorded $6.75 billion
in revenue in the third quarter of 2017 (3Q17), an increase of 7.4% year
over year. Meanwhile, the worldwide total enterprise and service
provider (SP) router market recorded $3.91 billion in revenue in 3Q17,
increasing strong 9.4% on a year-over-year basis. These growth rates are
according to results published in the International Data Corporation (IDC)
Worldwide
Quarterly Ethernet Switch Tracker and Worldwide
Quarterly Router Tracker.

From a geographic perspective, the 3Q17 Ethernet switch market saw
strong performance across the globe. The Central and Eastern Europe
(CEE) region saw the best results in 3Q17, growing 16.6% year over year.
Within CEE the best performing countries were the Czech Republic (up
47.3% year over year) and Hungary (up 40.2% year over year).
Asia/Pacific (excluding Japan) (APeJ) and Western Europe both increased
more than 12% year over year (12.6% and 12.4%, respectively) in 3Q17.
Notable country results within APeJ and Western Europe include China
with a strong 19.4% increase, Germany (up 23.2%), and India (up 18.2%
year over year). On the other hand, United Kingdom (UK) continued to be
impacted by uncertainty surrounding Brexit and declined 3.2% year over
year in 3Q17. Japan grew in double digits and was up 11.4% year over
year in 3Q17. Latin America's solid 7.7% increase was on par with the
overall market. Somewhat lagging the overall Ethernet switch market was
North America with its 3.4% year-over-year increase. The only region
that experienced a decline was Middle East & Africa (MEA) this quarter,
going down 1.2% year over year.

"Strong application-related infrastructure and services requirements at
the edge and core are continuing to complement significant cloud
buildouts, keeping the demand side humming for network infrastructure,"
said Rohit
Mehra, vice president, Network
Infrastructure at IDC (News - Alert). "In parallel, connecting the edge to the core
and cloud requires upgrades to WAN connectivity for which we continue to
see increasing demand across enterprises as well as service providers,
leveraging the architectural disruptions from areas like SD-WAN and
mobile backhaul."

100Gb Ethernet switch revenue continues to grow rapidly as adoption by
hyperscale and other cloud providers, as well as large enterprises,
continues to accelerate. 100Gb shipments reached almost 1.2 million
ports and $608 million in revenue. 100Gb now accounts for 9.0% of the
total market revenue, up from just 3.6% in a quarter a year ago.
25Gb/50Gb Ethernet switch products are starting to gain traction as
well, and in 3Q17 shipments exceeded 750,000 ports and $85 million in
revenue. As expected, the growth in 25Gb, 50Gb, 100Gb is negatively
impacting the 40Gb segment. 40Gb shipments decreased 36.7% year over
year and revenue was down 20.0% year over year in 3Q17. 10Gb experienced
solid results in 3Q17 with shipments growing 49.6% year over year and
revenue increasing 5.2% year over year. Meanwhile, 1Gb as the primary
connectivity technology for enterprise campus and branch deployments
continues to account for a majority of the Ethernet switching market.
1Gb port shipments reached 105.9 million ports after growing 10.6% year
over year and now accounts for 66.6% of all ports shipped in 3Q17. I
terms of revenue, 1Gb increased 2.4% year over year and accounts for
42.6% of revenue.

The worldwide enterprise and service provider router market grew 9.4% on
a year-over-year basis in 3Q17 based on a strong 14.8% increase in the
larger service provider segment and a 6.3% decrease in enterprise
routing. This will be a market to watch closely over the coming quarters
as software-defined architectures start to take hold across the WAN,
with the potential for SD-WAN to disrupt traditional routing
architectures and WAN transport services markets especially at the
network edge.

The combined enterprise and service provider router market saw a varied
regional performance in 3Q17, with APeJ recording the strongest growth
(up 31.7% year over year). MEA also performed well, growing 8.9% year
over year in 3Q17. CEE, North America, and Japan all saw mid-single
digit growth in 3Q17, up 5.6%, 4.8%, and 4.8%, respectively. Western
Europe declined 4.7% on an annual basis, while Latin America decreased
15.9% year over year in 3Q17.

Company Highlights

Cisco (News - Alert) finished 3Q17 with a year-over-year increase of 6.8% in the
Ethernet switching market and market share of 56.7%, up from its 54.7%
share in 2Q17 but slightly down from 57.0% in 3Q16. In the vigorously
contested 10GbE segment, Cisco held 53.3% of the market in 3Q17, up from
51.6% in the previous quarter. Cisco saw its combined service provider
and enterprise router revenue increase 3.0% on an annual basis, while
its market share came in at 41.4% in 3Q17, up from 40.8% in 2Q17, but
down from 44.0% in 3Q16.

Huawei (News - Alert) continued to perform well in both the Ethernet switch and
the router markets on an annual basis. Huawei's Ethernet switch revenue
grew 14.1% year over year in 3Q17 for a market share of 7.7%, up from
7.2% in 3Q16. Huawei's enterprise and SP router revenue increased 44.0%
over the same period to finish with 21.9% of the total router market in
3Q17 compared to 16.6% in 3Q16.

Hewlett Packard Enterprise's (HPE) Ethernet switch revenue
increased 7.5% year over year in 3Q17 and its market share stands at
5.5%, down from 5.6% in 2Q17 but flat on an annual basis. (Note: HPE and
H3C are tracked separately as of 2Q16).

Arista Networks performed well in 3Q17 with its Ethernet
switching revenue rising 49.6% year over year and earning a market share
of 5.6%, up from 4.0% in 3Q16.

Juniper's Ethernet switching decreased by 4.2% year over year in
3Q17 bringing its market share to 3.2% versus 3.5% in 3Q16. Juniper also
saw a 5.6% year over year decrease in combined service provider and
enterprise router revenues, with market share of 15.0% compared to 17.3%
in 3Q16.

H3C's Ethernet switch revenue, which is fully coming from the PRC
and Hong Kong markets, grew 37.3% year over year in 3Q17. H3C is finding
success both in the enterprise as well as with the PRC cloud providers.
H3C's enterprise router business also performed well and increased 50.9%
year over year in 3Q17.

"Among the major regions, North America was the outlier this quarter
with somewhat weaker growth, whereas some key countries and regions
outdid the market with a significantly high growth uptake in the switch
and router segments respectively," said Petr
Jirovsky, research manager, Worldwide
Networking Trackers. "There are opportunities for emerging OEM and
ODM vendors to gain share while challenging more established vendors to
rethink how they compete."

A graphic illustrating worldwide revenues for the top 5 Ethernet switch
companies for the previous five quarters is available by viewing this
press release on IDC.com.

About IDC TrackersIDC
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